Antitrust Cases Court Muddles Whistleblower Rules

A freight transport cartel investigation shows how complex rules are for whistleblowers within the European Union. Now a court has strengthened the clout of national antitrust agencies by deciding that E.U. rules about key witnesses aren’t binding.
Secrets aren't easy to reveal in the European Union.

A case involving a logistics company that confessed to cartel activity has highlighted the complexity of E.U. rules on whistleblowing.

Cartels don't often have borders. So to battle illegal monopolies and price fixing in Europe, the antitrust agencies of each E.U. member state and its executive branch work together with the European Competition Network.

The antitrust authorities share information about cases, decisions and evidence, and provide each other with administrative support during investigations.

But the ECN also gives rise to a sort of double jurisdiction, which can be problematic especially in handling whistleblowers – as Germany-based logistics company DHL recently found.

The European Court of Justice in Luxembourg decided regulations regarding key witnesses – as decreed by the European Commission in the framework of antitrust cases – are not binding for national antitrust agencies. Rules issued by the E.U. and member states are both independently valid.

Companies should submit key-witness petitions to all agencies with possible jurisdiction in the affair, in order to be on the safe side. Christian Kersting, Expert, Institute for Cartel Law

In this specific case, a verdict was issued against DHL in a case that became complicated.

In part, that’s because in context of regulations regarding key witnesses, what matters is the sequence in which whistleblowers report violations.

“Key witness petitions are extremely important,” said Christian Kersting, director of the Institute for Cartel Law at Heinrich Heine University in Düsseldorf.

These so-called “confessions” are often what make discovery of cartels possible.

“What is crucial is the point in time when a company comes forward. Whoever first acknowledges the existence of a cartel can completely avoid a penalty payment,” Mr. Kersting said.

Other participants who later provide significant evidence to the commission can also gain penalty reductions, depending on when they admitted involvement.

In 2007 and 2008, two Italian DHL companies reported to the European Commission several violations of E.U. competition laws in the area of international freight-transport services.

The companies applied for a remission of penalties.

At the same time, DHL had submitted a petition to the Italian antitrust agency AGCM in accordance with national regulations regarding key witnesses.

In the opinion of the Italian competition monitors, however, this declaration included only air and sea transportation, but not freight transport on the roads.

Somewhat later, another logistics company, Schenker, admitted to violations in the area of road-freight transportation and was freed of penalty payments.

In contrast, DHL received only a reduction in punitive damages.

DHL objected, and it sought to be granted top ranking as a whistleblower and to have its entire penalty payment rescinded. The company argued that the Italian agency should have given consideration to the main petition for key-witness treatment submitted to the European Commission.

The logistics provider cited the regulations of the ECN group.

The case was submitted to the European court in Luxembourg, which has decided that ECN regulations about cooperation between European and national antitrust agencies, including the key-witness facet, are not binding on national agencies. Thus, no inherent connection exists between petitions on national and European levels.

“In the penalization of cartel violations in Europe, there can be parallel jurisdictions of national antitrust agencies and the European Commission,” Mr. Kersting said.

Neither a centralized nor a harmonized system for key-witness petitions exists, he said. His recommendation:

“Companies should submit key-witness petitions to all agencies with possible jurisdiction in the affair, in order to be on the safe side.”


Heike Anger is an economics and politics editor at Handelsblatt, and a correspondent in the parliamentary editorial office in Berlin. To contact the author: [email protected]